RESOLUCIÓN N.º 891/MAYEPGC/15

Membership

The members of the Committee as at December 31, 2005 were David Kappler (Chairman), Barry Price, Ronald Nordmann and Patrick Langlois. Mr Kappler, Dr Price and Mr Nordmann served as members of the Committee throughout 2005 and Mr Langlois became a member of the Committee upon his appointment to the Board in November 2005. Each of the members of the Committee has been determined by Shire’s Board to be an Independent Non-Executive Director for the purposes of The UK Combined Code on Corporate Governance (the Combined Code). Each member also satisfies the NASDAQ rules regarding the independence of members of the Audit Committee.

Mr David Kappler chairs the Committee. The Board is satisfied that Mr Kappler, in his capacity as Chairman of the Committee, has recent and relevant financial experience. The Board has determined that Mr Kappler is the Committee’s financial expert for the purposes of the Sarbanes-Oxley Act 2002. Mr Kappler was a Director of Camelot Group plc from 1996 to 2002 and he serves as a Non-Executive Director at HMV Group plc and Intercontinental Hotels Group plc. Additionally, he is Non-Executive Chairman at Premier Foods plc. Mr Kappler is a fellow of the Chartered Institute of Management Accountants.

The members of the Committee are chosen from amongst the Non- Executive Directors of the Company who are independent for the purposes of the Combined Code and the NASDAQ rules and are selected on the basis of their knowledge and experience of financial matters and financial reporting. Committee members hold office for an initial period of two years, subject to continuing as a Director of the Company. Thereafter they may hold office for such duration as determined by the Board. Details of the fees paid to members of the Committee are set out in the Directors’ Remuneration Report on page 39.

Role of Committee

The Terms of Reference of the Committee have been approved by the Board and are available for review on Shire’s website. The key functions of the Committee under its Terms of Reference are to:

— monitor the integrity of the financial statements of the Company, including its annual and quarterly reports, preliminary results announcements and any other corporate announcement relating to the Company’s financial performance;

— ensure clarity of disclosure in financial reporting and the presentation of a balanced and understandable assessment of the Company’s financial position;

— have the primary responsibility for making a recommendation (to be put to shareholders for approval at the Annual General Meeting) in relation to the appointment, re-appointment, removal and remuneration of the external auditor and to assess, at least annually, the objectivity and independence of the external auditor;

— review and discuss issues and recommendations arising from the external audit, and any matters the external auditor may wish to discuss;

— set and apply a formal policy in relation to the provision of non-audit services by the external auditor with a view to preserving the external auditor’s independence and objectivity;

— establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters;

— review at least annually the effectiveness of the Company’s internal control system in the overall context of the Company’s risk management system;

— oversee the Company’s anti-fraud programmes and controls and to oversee the investigation and remediation of any alleged or suspected fraud;

— monitor and review the internal operational audit programme, consider the findings of internal operational audit reviews and management’s response to them; and

— review compliance with treasury policy.

The Committee reports to the Board on any matter on which it considers that action is required and makes recommendations for steps to be taken. The Terms of Reference of the Committee give it authority to investigate any activity within its Terms of Reference and to be responsible for the resolution of disagreements between management and the auditor regarding the Company’s financial reporting. The Committee is also authorised to seek any information it requires from any employee of the Company in order to perform its duties and to call any employee to be questioned at a meeting of the Committee.

The Committee met on six occasions in 2005. Each meeting was attended by all members of the Committee. At the invitation of the Chairman, the Chief Executive Officer, the Chief Financial Officer and the Group Financial Controller attended all of the Committee’s meetings in 2005. In addition, at the invitation of the Chairman, the Chief Risk Officer and Head of Internal Audit attended each of the four quarterly meetings at which risk management systems and internal audit programs were reviewed.

In accordance with its Terms of Reference, the Committee held a number of private meetings with the lead partner from the Company’s external auditors and the Company’s Chief Internal Auditor during the course of the year without any executive member of the Board in attendance. The purpose of these meetings was to facilitate free and open discussions between the Audit Committee members and the Chief Internal Auditor and the external lead audit partner separately from the main sessions of the Audit Committee (which were attended by the Chief Financial Officer and the Group Financial Controller).

Approval of audit and non-audit services provided by auditor The Committee has adopted formal policies and procedures in relation to the provision of audit and non-audit services by the external auditor, which were most recently revised in February 2006. The principal purpose of these policies and procedures is to ensure that the independence of the external auditor is not impaired.

The Sarbanes-Oxley Act 2002 (and accordingly the Committee’s policy) prohibits the provision of certain non-audit services to the Company by the external auditor, including:

— bookkeeping or other services related to the accounting records or financial statements of the Company;

— design and implementation of financial information systems;

— appraisal or valuation services, fairness opinions or contribution-in- kind reports; and

— actuarial or internal audit outsourcing services.

Other types of audit and non-audit services may be performed by the external auditor if the work is either specifically pre-approved by the Committee or the work falls within the Committee’s schedule of pre- approved services. The Committee’s pre-approval policy covers three categories of work – audit services, audit-related services and tax services. If the proposed services to be provided by the external auditor fall within a category of pre-approved services, they may be provided by the auditor without being specifically approved by the Committee,

Audit Committee report

provided that management does not need to exercise any discretion in determining whether a proposed service falls within one of the pre-approved categories. In all cases, the Committee is notified of any pre-approved service that is provided by the auditor.

Any service proposed to be provided by the auditor which is not a pre-approved service must be approved in advance by the Committee, which will consider whether the independence, skills and experience of the auditor make it a suitable supplier of the proposed service.

Committee activities

During 2005, the business discussed by the Committee included the following:

1 Financial statements

— the financial disclosures contained in the Company’s quarterly results announcements;

— various accounting matters, including the application of the Company’s critical accounting policies and new accounting standards in the context of the financial disclosures, including the acquisition of TKT, the impact of the Health Canada suspension of ADDERALL XR, the impact of fair value accounting for share- based compensation and new Inventory Management Agreements with key US wholesalers;

— a review of the Company’s preparations for the adoption in 2005 of International Financial Reporting Standards (IFRS), including the approval of the Company’s accounting policies under IFRS. The Audit Committee reviewed and approved the Company’s publication in September 2005 of its half yearly financial statements and full-year comparative financial statements for 2004, as prepared in

accordance with IFRS; and

— quarterly reports from the external auditors were received by the Committee and discussed. The reports addressed the following key areas:

— auditor responsibility and independence;

— significant accounting estimates and judgements made by management;

— audit adjustments proposed and whether they were corrected by management; and

— significant accounting policies and unusual transactions.

2 Internal financial control and risk management systems — the Company’s risk management strategy, its internal audit strategy,

its plan and progress in complying with Section 404 of the Sarbanes- Oxley Act 2002 and the effectiveness of the Company’s system of internal control during the year;

— revisions to the policy for the management of treasury were reviewed and recommended for approval to the Board;

— quarterly reports on treasury investments and compliance with treasury policy were discussed;

— approval of the insurance renewal programme for 2005/6;

— monitoring of the Group’s whistle-blowing and fraud policies; and

— the Company’s internal controls over financial reporting.

3 External auditor

The Committee reviewed the performance of the external auditor following the completion of the 2004 audit process, which resulted in the Committee resolving to recommend that the Company submit a resolution to the 2005 Annual General Meeting to re-appoint Deloitte & Touche LLP as the Company’s external auditor. At forthcoming meetings in 2006, the Committee will conduct a formal review of the performance of the external auditor and the effectiveness of the audit process in connection with the 2005 financial year audit.

Throughout the year, the Committee has kept the objectivity and independence of the external auditor under review and has obtained reports from the Company’s external auditor describing all relationships between the auditor and the Company. The Committee has remained satisfied that neither the level of non-audit services nor the nature of the work performed by the external auditors has in any way impaired their objectivity and independence. Details of the fees paid to the external auditors are disclosed in Note 7 to the consolidated financial statements.

David Kappler